By Iain Ramage, VP channel, Rocket Software.
Household banking names are experiencing to face down a number of challenges right now. The first is innovation. Let's be honest, when considering innovation, it is not the UK stalwarts like Lloyds, HSBC or Barclays that immediately come to mind. Instead, fintech start-ups like TransferWise and Revolut are more likely to be perceived as leading the banking revolution. These beginners are starting to pose a really real threat to established brands as they chip away at share of the market. The second challenge is compliance; juggling huge amounts of data and maintaining compliance with a variety of regulations is causing some worried frowns. The only method that banks are going to be in a position to tackle either of these challenges is through technology, which is good news for technology suppliers and resellers.
Never too old to innovate
With PSD2 (the Revised Payment Service Directive) coming into force this year, customers are now able to use third-party providers to manage their finances. What this means is banks are obliged to give third-parties, such as Monzo, access to their customers' accounts and are therefore no longer just in competition with one another.
To combat this, banks may need to look at ways to stay competitive. With so many new kids on the block, using a more agile, 'start-up' mentality can help, which some of them already have; “Hands up should you belong to a start–up company that’s 250 years old,” James McLeod, Software Lead at Lloyds, asked the crowd at Github Constellation this year, aiming to dispel the notion that traditional banks are too old to innovate.
In order to innovate, banks need to be agile and develop systems that allow them to compete with the fast-moving market. This will mean adopting a DevOps methodology; the closer integration of development and processes staff will enable internal teams to collaborate within a project, resulting in shorter development cycles and more dependable software releases. However, changing decades of working practices is a serious challenge that isn't likely to be fixed with an internal memo; it will need something more robust. Banks must equip developers with the right tools for the job, namely, Application Lifecycle Management (ALM) automation.
By automating the approvals and version control, these processes are totally removed from the danger of human error, as every change is automatically recorded, allowing developers to “roll back” to a previous version if something goes wrong. This gives banks the ability to adapt their professional services faster and more safely. Automation presents an excellent opportunity for technology providers to assist banks become more agile, take care of the competition, as well as protecting against downtime and customer data loss.
Data security is an area where banks should be using their advantage over the smaller newcomers, his or her trusted brands and secure systems are often an assurance of security. When developing new applications, banks need to ensure they are documenting the software development processes fully in order to satisfy auditors. Any changes to software that handles user IDs, passwords and other personal information must be treated with particular care to be able to stay compliant.
ALM automation enables employees to view, manage and report work with an operations portal. The automated programme systematically records and documents all actions taken by developers, including when and why these actions were taken. This will make life much easier for auditors, as all records are automated, kept in one secure location and saved in the same format. ALM automation therefore results in faster – and cheaper – audits. Some banks have even found that once auditors are told that they have implemented ALM automation, they can quickly tick things business list and avoid further investigation of systems, helping banks stay agile and which makes them a competitive force to reckon with.
Regulatory compliance should not always be considered negatively. Based on Daniel Schmand, Global Head of Trade Finance at Deutsche Bank, it should be seen as an opportunity to review policies, processes and controls. Looking at regulatory compliance as a chance to improve banking is certainly a favourable approach, especially when taking on the mammoth task of managing data and staying compliant anytime.
For technology providers and resellers, ALM automation presents an opportunity that is not to be missed. It is more than simply applying a new process to an old system – it's about helping banks to make the most of what they already have to be able to stay relevant, and dare we say – show the newcomers how it's done.